Understanding fractional shares

Please note: Figures and images are shown for illustrative and educational purposes only and should not be considered as an advice or recommendation.

Have you ever considered investing in big-name stocks but found their prices too high? You’re not alone. Many investors feel like they’re missing out on companies they believe in because buying a single share is too expensive.

The good news is that with fractional shares, you don’t have to wait until you have enough money to purchase a full share. Now, you can start investing with as little as $1, making it easier than ever to get into the market and build a strong financial future—one fraction at a time.

Fractional shares allow you to buy a portion of a stock instead of buying an entire share, meaning you’re not limited by high share prices. You can also buy stocks based on your budget or specify the exact amount that you want to invest and we’ll figure out how much you can own. 

With fractional shares, you can invest what you can afford, whether that’s $1, $10, $50, or more. This can be a great opportunity to invest in high-performing stocks that may have expensive prices.

For example, if a stock is priced at $250 per share, and you only have $50 to invest, you can still own a piece of that company by buying one-fifth of that share.

Or if you have $300 and a stock is priced at $65 per share, our platform will purchase the corresponding 4.6154 shares for you.

Lower cost to start investing: You should have the opportunity to access the stocks or ETFs you want to invest in, regardless of your budget. With fractional shares, you can start investing with as little as $1. You don’t need to save up for an entire share before getting started.

Access to big-name stocks: High prices shouldn’t stop you from investing in a company you love. Fractional shares make it possible to own a piece of it and participate in its growth.

No commission fees: Keep more of your money working for you. When you buy and sell fractional shares, there’s no commission fees, making it easier to grow your portfolio over time. 

Dollar-Cost Averaging: Easily invest a fixed amount of money at regular intervals, regardless of the asset’s price. This approach can help you reduce the risk of investing with a large sum of money at  the wrong time, like during a market peak. 

Easily diversify: Reduce your investment risk by diversifying your portfolio across a wider range of companies, industries and ETFs. You’re no longer limited by the price of a single stock. With fractional shares, you can easily spread your investments across different companies and sectors, even with a small budget, so you’re not putting all your money into just one stock.

Let’s say you have $325 to invest. You can easily invest and diversify:

Please note: Figures and images are shown for illustrative and educational purposes only and should not be considered as an advice or recommendation.

With your $325, you've immediately gained exposure to five distinct companies across different sectors:

• TSLA (Tesla): The automotive and clean energy sector.
• AMZN (Amazon): E-commerce and technology.
• KO (Coca-Cola): Consumer staples.
• META (Meta Platforms): Social media and technology.
• NVDA (Nvidia): Semiconductors and technology.

Without fractional shares, investing in these five companies would likely require significantly more money.  By using fractional shares, you've effectively spread your investment across a diverse range of industries, reducing the impact of any single company's performance on your overall portfolio. This shows the great benefit of fractional shares in diversification, even with a modest investment amount.

Buying fractional shares is easy and flexible. You can invest by:

• Dollar value: Enter the exact amount you want to invest, and your brokerage will calculate how much of the stock you can buy.
• Quantity of shares: Enter a decimal quantity, such as “0.5” for half a share.

When you place a trade in your Questrade account and it executes, your fractional shares are added to your portfolio instantly.

In many ways, fractional shares work the same as full shares:

• You benefit from stock price growth.
• You receive dividends proportional to your holdings (e.g., if you own half a share of a stock that pays a $2 dividend per share, you’ll receive $1).

However, fractional shares don’t come with shareholder voting rights, unless you accumulate enough to form a full share, in which case, you get all the benefits of whole-share ownership.

Buy fractional shares instantly with Questrade. When you buy fractional shares with Questrade, your trades are executed in real-time. That means no waiting when you decide to invest. Your trade is processed immediately at the current market price, so you know exactly how much you’re paying.

Take advantage of Questrade’s free and real-time fractional share trading. See how we compare to other institutions and discover our great benefits:

When you're investing in fractional shares, every dollar counts. With Questrade, a $10 investment means exactly that— you get 100% of your money invested with $0 commission.

Let’s look at an example below. While Questrade ensures your full $10 goes to work for you with $0 commission, TD Bank's $1.99 fee on the same $10 fractional trade means almost 20% is lost before you even begin. So, if you’re starting small with fractional shares, does it really make sense to hand over almost a fifth of your investment in fees on every trade? This shows how paying commissions can greatly diminish your investing power, making it a costly choice for you in the long run.

While fractional shares offer numerous benefits, there are a couple of things to note:

Limited transferability: Fractional shares can’t be transferred in-kind from one brokerage to another. If you decide to move your investments to another platform, you’ll need to either buy enough to make them whole shares or sell them and transfer the cash.

No voting rights: As mentioned earlier, voting rights are typically only granted to whole-share owners. However, if you later accumulate enough fractional shares to form a full share, in most cases you’ll be able to gain voting rights.

Fractional shares are just the beginning of exciting new developments on our platform. To get early access to upcoming features and tools, as well as help shape their future, we invite you to join our QuestAlpha panel.

For more information regarding Fraction Share trading please refer to the Questrade Fractional Share Disclosure.

Zero commission trades', '$0 commissions', '$0 trading', 'trade commission-free' and similar messages, refer to commission-free trading for trades placed online through Questrade, Inc.'s website or mobile apps for stocks and ETFs that are listed on a stock exchange in the United States or Canada. Other fees may still apply.

Note: The information in this blog is for educational purposes only and should not be used or construed as financial or investment advice by any individual. Information obtained from third parties is believed to be reliable, but no representations or warranty, expressed or implied, is made by Questrade, Inc., its affiliates or any other person to its accuracy.